16 June 1985
AUSTRALIA-US TRADE RELATIONSHIP 'SOUND, BUT REQUIRES ATTENTION' - McMULLAN
Releasing A Partnership In Transition - a review of Australia-United States trade and investment - in Canberra today, the Minister for Trade, Senator Bob McMullan, said our apparently deteriorating trade performance with the US is predominantly the outcome of rational choices by the Government and Australian industry.
Senator McMullan said the report acknowledges there is still much to do in addressing the US trade deficit.
"While access to the US market remains liberal by international standards, there are still a number of very serious access barriers in areas of particular interest and priority to Australia," Senator McMullan said.
"And, of course, there are aspects of US trade policy which act seriously to diminish our trade opportunities in third countries.
"A very conservative estimate is that barriers to Australian merchandise exports to the US add over $1 billion to the merchandise trade deficit, which approximates to our total annual exports to Malaysia, to Thailand, to Germay, or to Italy."
The barriers include:
Senator McMullan said policy choices on the part of the Government and market choices on the part of industry reflect the internationalisation of the Australian economy and a significant change in the nature of our trading relationship with the US.
"In 1990, Australia's merchandise trade deficit with the US was $6.1 billion," Senator McMullan said.
"Last year, it had risen to $10.2 billion, with imports from the US increasing from $11.9 billion to $14.8 billion, and exports from Australia decreasing from $5.8 billion to $4.6 billion.
"In football terminology, this is a turnaround of $4.1 billion, or a third of our present day merchandise trade deficit plus a billion dollars.
"But trade isn't a football game," Senator McMullan said.
"At any one time, we are engaged not only with the US, but with a number of other players where, often, the trade situation is reversed.
"We run substantial merchandise trade surpluses with some countries. For example, Australia has a merchandise trade surplus with Japan of around $4 billion."
Senator McMullan said a key factor of our trade relationship with the US is that imports from the US have been central to important and beneficial changes taking place in the Australian economy.
"Australian industry is continuing to use more and more US capital and intermediate goods to boost its overall competitiveness and production capacity domestically and for other export markets, particularly in Asia," Senator McMullan said.
"Australia's increasing economic engagement with Asia, which has served to divert Australian exports away from the US, is an outcome of market choice.
"The simple fact is that, in some products, it has been to Australia's short and long run economic advantage to switch products to markets in Asia because of the dynamic economic growth of Asian economies, the decline in regional transport costs, and the increasing profitabililty in these markets.
"The switching of exports from the US market to Asian markets has, in fact, produced higher returns for Australian exporters."
Senator McMullan said reports such as A Partnership In Transition provide the substance of Australia's overall trade policy, including the direction for a concerted strategy to deal with the trade barriers in the US and refining our bilateral trade strategy.
"This report sets out where we see the economic relationship with the US going - still with a heavy focus on primary commodities, but it is increasingly a relationship targetted at paving the way for new export areas.
"I will be making my first visit as Trade Minister to the US next month, and this report will certainly form the basis of my approach to discussions with my US counterpart and officials."
Further information:
Senator McMullan's office: John Flannery, (06) 277 7420, 018 482 887